Mr. Sunil Singhania is the CIO - Equity Investments at Reliance Mutual Fund. Sunil has a total experience of over 21 years in the industry. Before his association with Reliance Mutual Fund, Sunil gained considerable experience on the sell side in Indian equity market.

Sunil graduated in commerce from the Bombay University and completed his Chartered Accountancy from the ICAI, Delhi with an all India rank. He also holds the CFA designation from CFA Institute, USA. Having traveled extensively across the world, Sunil has attended many global investment conferences and seminars.

Q. How should investors judge the performance of any fund while making investment decisions?

Answer: Investors should look at various parameters while selecting a fund such as the long-term track record of the fund, the investment team managing the fund and the credentials of the asset management company or the fund house. Long Term performance track record across market cycles provides an important insight into the fund ability to navigate market volatilities and deliver returns across conditions. Equally important is the track record, experience of the fund management team as frequent changes in fund managers can impact the fund performance. Also, investors need to analyse the fund house track record, the investment team’s strength, experience, focus on research etc. as all these factors are critical for sustained superior performance.

Q. Which are the top sectors you are currently bullish on at these levels and what's the rationale behind the same? On the contrary, which sectors are you avoiding at this point?

Answer: We are positive on domestic recovery themes which can benefit significantly from lower interest rates, higher disposable income and policy reforms. Some of the key themes include:

We are underweight to neutral on themes like I.T, Pharma & Telecom currently because of global and domestic concerns however we continue to actively monitor the space as the valuations are turning reasonably attractive.

Q. The Indian Banking system continues to suffer due to NPAs. Recently, some measures have been taken by the government to solve the issue. In your opinion how bad is the situation and how long would it take for the banking sector to come out of the problem?

Answer: Government and RBI have undertaken various steps to tackle the NPA issues and are attempting to pro-actively address the NPA issues. We have already seen lot of deleveraging happening as companies sell off their noncore assets to reduce debt and banks being very proactive to tackle it. We believe the NPA cycle has peaked and is already displaying signs of moderating, however the complete resolution may still be a few years away.

Q. Globally, there are visible geo-political and trade tensions on one hand while on the other hand China is aggressively pursuing OBOR (One Belt, One Road) initiative. How do you see these things will impact the Indian economy in future?

Answer: India has been a domestic consumption led economy as against an export oriented economy like China. India did suffer a bit during the 2009 crisis but we have emerged stronger from it. Indian exports (including software) account for 15-20% of the GDP and some of the major exports are gems & jewellery, petroleum products, engineering goods where we have a niche advantages over our competitors. There may be some slowdown in I.T. & Pharma exports due to US restrictions but companies are adapting to new technologies, diversifying their markets to reduce dependence on one market.

Q. The markets continue to scale newer peaks and the valuations seem to be stretched. However, there are still expert voices of markets receiving even greater heights. What is your opinion on same and how should the investors be positioned at this point of time?

Answer: The recent run up in the equity markets post demonetization has led to markets now trading at approx. 10% premium to long term averages. These valuations should be seen in the light of cyclical low base of earnings and expectations of the likely earnings improvement (higher double digit growth expected in FY18 and FY19) supported by uptick in cyclical demand. Indian economy continues to offer higher growth possibilities supported by strong fundamentals, reform thrust and is beneficiary of non-linear events like lower commodity prices, falling interest rates. Hence the outlook for Indian Equity markets remains positive from a medium-term perspective.

For retail investors disciplined regular investments can lead to long term wealth creation, hence investors can consider investing systematically either through SIPs or SWPs. In case some investors are under allocated to equities they can consider a combination of Lump Sum with Systematic investments in line with their asset allocation plan.

Q. What would be your advice to both existing and new customers looking to benefit from India's growth story at this point of time? How should they invest for long term wealth creation at these levels?

Answer: Asset allocation is the key for Long Term Wealth Creation and investors should decide on their equity allocations based on the same. Equity is an important asset class with an ability to generate sustainable inflation plus returns over the medium to long run and hence investors (based on their risk appetite, time-horizon) need to have some allocation to the asset class across time periods.

New investors under allocated to equities can consider a combination of Lump Sum and regular investments through SIP/SWP for the equity investments. Existing investors too can adopt a similar investment mode based on their current allocation to equities.

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